Indexed annuities’ performance may not be what you expect
February 20, 2018 by Greg Iacurci
At first glance, indexed annuities may sound quite similar to index mutual funds.
Their names suggest as much.
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Sheryl Moore, president and CEO of market research firm Moore Market Intelligence, has a rule of thumb for judging how much juice advisers and clients can expect to get from an indexed annuity over its contract life: Take the average rate of all one-year fixed-rate annuities and add 1% to 2%.
The current rate on one-year fixed-rate annuities (which only guarantee an interest rate for the contract’s first year) is 2.7%. So indexed annuities will earn roughly 3.7% to 4.7% over the contract life, Ms. Moore said.